According to the theory of rational expectations, the "fooling" of workers in Friedman's model
A) is rational, since sudden unforeseeable changes in aggregate demand can and do occur.
B) is rational, since workers are always on their labor supply curve.
C) is not rational, since workers should learn to immediately link unexpected wage changes to wrongly-forecast price levels.
D) is not rational, since workers are often thrown off of their labor supply curve.
C
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If Isabella buys two goods and the prices of both goods decrease by 50%
A) the budget constraint will be unchanged. B) the slope of the budget constraint will increase. C) the slope of the budget constraint will decrease. D) the budget constraint will shift outward in a parallel fashion.
Total state and local government spending in 2007 was
a. less than $100 billion b. approximately $500 billion c. nearly $1.9 trillion d. approximately $10 trillion e. more than $25 trillion